Airbnb Insurance: What an Agent Needs to Know
Similar to the Uber ride-sharing concept, Airbnb was founded in 2008 to be an online marketplace where people can list, discover, and book unusual accommodations around the world by using a computer, tablet, or smartphone.
While this accommodation platform is still growing, Airbnb reports serving over 60 million guests in 34,000 cities spread across 91 countries. They also report over 2 million property listings that include every type of accommodation you could think of. Need a castle for the week? No problem, they have 1,400 of them available.
Standards of Operations
One of the organization’s reasons for success is their initiative in helping host property owners to be in business for themselves but not by themselves. Airbnb offers a litany of advice and requirements to make certain that host property owners don’t have to go through a trial and error period to maintain safe and well-run properties. They offer the property owners valuable information about safety standards that will minimize hazards found in the accommodation industry as well as dealing with regulations set forth by the jurisdictions where your property is located.
Insuring The Airbnb
The primary insurance issue is that these properties are not eligible for a standard homeowner’s policy. Typically, when the insurer discovers that the home is being rented on a nightly or weekly basis, the contract is voided, and the property owner is left without coverage.
A standard HO3 homeowner’s policy is for owner-occupied properties only. The typical homeowner’s insurance company will allow vacation or secondary homes, but any home that is rented to the public is ineligible for a homeowner’s policy.
Airbnb Insurance Coverage
The Airbnb organization does offer a liability policy for host properties in certain countries. This liability policy is considered primary coverage but property owners should be aware that it does not offer comprehensive coverage like other commercial policies would offer.
As for the dwelling or building itself, the property owner will need to insure the dwelling with a standard commercial property policy.
For comprehensive coverage that provides protection for the building or dwelling, contents, liability, medical payments, and loss of use, the Airbnb property owner (host) should consider a commercial package policy from a carrier that specializes in nightly and weekly rental units. These insurance companies specialize in what they know most about, which is short-term rental risks and can apply rates accordingly. Many insurance carriers will insure short-term rental properties but are not familiar enough with this type of risk to offer a comprehensive program at the most affordable rates.
When speaking with prospects that are the host of an Airbnb property and counting on a typical homeowner’s policy to provide proper coverage, you need to advise them that a homeowner’s policy will not be appropriate for the use of their property. Let them know in no uncertain terms that their property is considered a commercial operation when they are renting on a weekly or nightly basis, even if they continue to live in the property.